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Wednesday September 22nd, 2021
Economy

Sri Lanka exports and imports could be disrupted if Suez canal remains blocked

ECONOMYNEXT – Sri Lanka’s exports and imports could face delays if the Suez Canal remains closed, as re-routing ships via the tip of Africa would take more than a week, adding to delivery delays and pushing up costs as global supply chains are disrupted industry officials said.

“North of West bound export cargo can be delayed and imports could be delayed,” Rohan Masakorale, head of Sri Lanka’s Shippers’ Academy said.

“Global supply chains are already affected, turnarounds are delayed and congestion is building up.”

Ever Given, a 20,000 TEU container vessel of the Evergreen line ran aground across the Suez Canal on March 23 and was earlier expected to be refloated quickly, perhaps in 24 to 48 hours.

However on March 25, the Suez Canal officially suspended navigation. Maeark and Hapag-Lloyd had said they were planning divert ships.

Fears have been raised that would take a week or more to refloat the vessel whose bow is aground on a sandbank on one side of the canal and its stern has hit the opposite side.

Masakorale said it would take around 7 to 10 days, depending on the type of vessel, to go around Africa adding to delay and extra fuel which would push up costs.

Some of the fastest ships could make the journey in 6 days according to industry analysts.

Masakorale said 12 percent of the global trade goes through the canal including 30 percent of containers.

“It is not only containers but bulk cargo and crude,” he said. “Deliveries to refineries are delayed and there is already a rise in fuel prices.”

Estimates on the hit of global trade were around 400 million dollars an hour, he said.

The disruption comes as air cargo prices have started to ease slightly, Masakorale said.

Though some items could be routed by air, which may drive up airfreight rates, the global trade depended on ships.

Now hundreds of thousands of boxes are stuck aboard vessels, which will have a ripple effect across supply chains. The longer it takes for the ship to be dislodged the worse the impact.

Suez Canal Authority said eight tugs have been deployed to help dislodge the vessel. The sand is also being dugout. If the ship cannot be re-floated in high tide, cargo and fuel would have to be unloaded, which would take more time. (Colombo/Mar26/2021)

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